Saudi Arabian Mining Company (Maaden) has approached banks for a loan of SR7bn ($1.86bn), according to sources in the kingdom.

Banks have already been invited to take part in the loan, which is structured as a revolving credit facility with a tenor of five years, and commitments are due by 12 May. The deal is being arranged by the UK’s HSBC.

Bankers who have been invited to participate in the deal say that Maaden will use the funds for capital expenditure and general corporate purposes. Financial close is understood to be targeted for the third quarter of the year.

Last year, the company closed the $3.6bn financing for phase two of its aluminium project in Saudi Arabia, which is being developed as a joint venture with the US’ Alcoa. In total, the project will cost around $10.8bn to build.

Demand for loans is expected to pick up significantly in Saudi Arabia over the course of the year as borrowers look to capitalise on the liquidity in the local banking sector. “We are expecting to see a lot of demand for liquidity in the second half of the year, so Maaden has done well to come out before the market really starts to pick up,” says one banker at a local lender.